Susan Crawford on telecom monopolies and sports programming's role in high U.S. Internet prices and slow speeds

On the Majority Report yesterday, Susan Crawford chatted with Sam Seder about her new book, Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age. It's a generally insightful (and frustrating) talk about the absence of competition in the telecom marketplace -- especially the market for home broadband service.

Crawford "explains why the Internet should be treated like a electricity, why Wired access is essential for success in today’s economy, why private companies have no incentive to provide universal access, the industry push back against her ideas, why market concentration is so high in the wireless market and educating the public on the need for an communications policy."

Of particular interest to me was an exchange between Seder and Crawford about the role of sports in these processes (transcript below). Since sports content is so highly valued by consumers (and, arguably, the one type of programming that's holding the traditional cable model together), companies like Comcast can use their sports holdings/programming to erect barriers to entry to competing providers. Providers that, as Crawford explains, could offer (or force the big fellas to offer) faster and cheaper broadband services.

Sam Seder (23:38): When a player like Comcast buys NBC Universal, what they're now doing essentially is they're putting up two barriers to entry -- just to re-state in some respects what you're saying here. They're putting up two barriers to entry aside from the fact that they had at least a de facto monopoly that existed. The first barrier is that a competitor would have to come in and dig up a lot of ground to put in a cable. And the second is that once they had that cable and they were able to reach the homes, they would ... have essentially less opportunity to stream content because Comcast -- theoretically -- could say, "hey, you know, NBC is going to cost you a little bit more. All of the properties we own in terms of developing this content, now that we've cornered this market -- that's going to cost you a little bit more too. So there's two, if not three, barriers to entry. 

Susan Crawford (24:31): Yeah, that's right. And a particularly important one in this context is sports, because Comcast and Time Warner Cable--. But particularly Comcast. Comcast owns more than 10 regional sports networks, and that gives them tremendous power in local markets. It can decide what pricing's going to be for access to that programming. Now it has to offer itself that same pricing. But that's pretty easy. That's just sending things from one pocket to the other. And then when it comes to very small upstart -- new competitors -- they often pay 3X what Comcast or Time Warner will pay for the same programming as a distributor. The logic there, from the programmer's standpoint, is that they give a volume discount for the very big guys. But, as you say, that operates as a tremendous barrier to entry for new operators trying to come in trying to serve people with very high speed transport. Google ran into that in Kansas City. It's had trouble getting access to Time Warner Cable's-owned sports network at a reasonable price.